Correlation Between Arctic Star and Clifton Mining

Can any of the company-specific risk be diversified away by investing in both Arctic Star and Clifton Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Arctic Star and Clifton Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arctic Star Exploration and Clifton Mining Co, you can compare the effects of market volatilities on Arctic Star and Clifton Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Arctic Star with a short position of Clifton Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Star and Clifton Mining.

Diversification Opportunities for Arctic Star and Clifton Mining

-0.23

Correlation Coefficient

Arctic Star  Clifton Mining

Very good diversification

The 3 months correlation between Arctic and Clifton is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Star Exploration and Clifton Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clifton Mining and Arctic Star is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Arctic Star Exploration are associated (or correlated) with Clifton Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clifton Mining has no effect on the direction of Arctic Star i.e., Arctic Star and Clifton Mining go up and down completely randomly.

Pair Corralation between Arctic Star and Clifton Mining

Assuming the 90 days horizon Arctic Star Exploration is expected to generate 0.99 times more return on investment than Clifton Mining. However, Arctic Star Exploration is 1.01 times less risky than Clifton Mining. It trades about 0.05 of its potential returns per unit of risk. Clifton Mining Co is currently generating about 0.04 per unit of risk. If you would invest  0.72  in Arctic Star Exploration on September 4, 2024 and sell it today you would earn a total of  0.01  from holding Arctic Star Exploration or generate 1.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Arctic Star Exploration  vs.  Clifton Mining Co

Arctic Star Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arctic Star Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Clifton Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clifton Mining Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Clifton Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arctic Star and Clifton Mining

The main advantage of trading using opposite Arctic Star and Clifton Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arctic Star position performs unexpectedly, Clifton Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Clifton Mining will offset losses from the drop in Clifton Mining's long position.

The idea behind Arctic Star Exploration and Clifton Mining Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.